(CTN News) – A Scotts Miracle-Gro Co. (SMG.N) subsidiary has filed a lawsuit against an investment management firm in a U.S. court, alleging that the latter attempted to “ruin” the lawn and garden affiliate’s $175 million stake in a company that acquires businesses in the cannabis sector.
Scotts Miracle-Gro subsidiary Hawthorne Collective Inc. and a related entity filed a lawsuit in Manhattan federal court on Monday, accusing JW Asset Management LLC and cannabis operator TerrAscend Corp. of breaking American antitrust law in their attempt to control the board of directors of the cannabis acquisition company, RIV Capital Inc. (RIV.CD). JW Asset Management manages TerrAscend.
The main subject of Hawthorne’s case is what will happen to the New York cannabis industry.
Hawthorne’s multimillion-dollar investment enabled RIV Capital to purchase Etain LLC, a cannabis production and retail firm based in the New York region, for $247 million last year.
According to the complaint, TerrAscend also sought to acquire Etain, one of the first businesses with a state medicinal marijuana license.
The complaint claims that JW Asset Management, RIV Capital’s biggest shareholder, is attempting to remove three members appointed by Hawthorne from the board of the Toronto-based RIV and replace them with “selected” candidates from the investment business.
According to a lawsuit filed in federal court for the Southern District of New York by Hawthorne, “Defendants’ assaults against, and efforts to acquire control of, RIV Capital violate federal antitrust law.”
Tuesday, messages left for a JW Asset Management representative in Armonk, New York, did not get a prompt response. The company’s attorney had not yet made his appearance. A TerrAscend representative was unable to comment right away.
Maryland, New Jersey, California, and other states have cannabis businesses run by TerrAscend, which is listed on the Canadian Securities Exchange.
According to Hawthorne, a “series of anti-competitive or other unlawful and inappropriate measures” was carried out “to prevent RIV Capital’s entrance into the New York-New Jersey market.”
According to the complaint, preventing RIV Capital from entering New York would lessen industry competition, which would be in TerrAscend’s favor.
Safirstein and Scott’s official from Ohio, which had $3.92 billion in sales for the fiscal year 2022, did not immediately respond to requests for comment.
For “strategic minority investments” in certain sectors of the cannabis business, Scotts established the Hawthorne Collective in 2021. When Hawthorne Collective was added, the business said that it enabled them to “explore and seek new prospects.”
The parties involved are The Hawthorne Gardening Company and JW Asset Management LLC, and the case number is 1:23-cv-00979.
Peter Safirstein of Safirstein Law is representing the plaintiffs.
For the accused: Presently unavailable